Public Bill Committee

[Sandra Osborne in the Chair]

Sandra Osborne: Before we begin our line-by-line consideration of the Bill, some explanation might be useful to those relatively new to Public Bill Committees. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate; amendments grouped together are generally on the same or a similar issue.
A Member who has put their name to the lead amendment in a group is called first. Other Members are then free to catch my eye to speak on the amendments in the group. A Member may speak more than once in a single debate. At the end of a debate on a group of amendments, I will call the Member who moved the lead amendment again; before they sit down, they will need to indicate whether they wish to seek to withdraw the amendment or to press for a decision. If any Member wishes to press any other amendment in a group to a vote, they need to let me know. I will work on the assumption that the Government wish the Committee to reach a decision on all Government amendments.
Please note that decisions on amendments do not take place in the order in which they are debated, but in the order in which they appear on the amendment paper. Where this is not already indicated on the selection list, I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following the debate on the relevant amendments. I hope that explanation is helpful.

Clause 1  - Where Part 1 applies

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: Thank you, Mrs Osborne, and I welcome everyone to what I am sure will be a fascinating few weeks of our lives together.
The clause sets out the scope of part 1 of the Bill, which applies where there is a contract between a trader and a consumer, and the contract is for the trader to supply goods, digital content or services. Successive Governments have regarded it as important to allow businesses freedom to make contracts with each other without guidance from regulation or Government intervention. It would be a significant departure if we changed that, which is why we are not extending the definition to contracts between two traders. Business-to-business contracts and consumer-to-consumer contracts will still enjoy existing protections, in particular under the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982 and the Supply of Goods (Implied Terms) Act 1973.
The Bill does not set out the rules that determine how a contract is made, which means that if a consumer has entered into a contract—however it was made—he or she can be assured that the contract will attract the protections provided by the Bill. Consumers’ protection is not limited just because they have not signed a written contract.
Importantly, the clause also sets out how part 1 applies to a mixed contract, which is important because the Bill sets out separate rights and remedies for goods, digital content and services. If a consumer has entered into a contract to purchase a mixture of those, he or she will have the assurance of knowing that such a mixed contract is nevertheless covered by the Bill and will know which part of the Bill to look to for the relevant rights and remedies.

Stella Creasy: I echo the Minister’s comments about looking forward to an enjoyable number of weeks together discussing the merits of consumer rights in the country. Labour Members are delighted at the opportunity and, cognisant of the fact that in this country we often only get the chance to get our consumer rights legislation right every couple of decades, it is important that we do get things right. We want to see the Bill progress, but as the best piece of consumer legislation possible.
The clause is a technical one about the beginning of the contract. We have tabled amendments to a number of clauses to reflect our concerns and to tease out how the Bill will be implemented. We are not opposed to clause 1, although we have some concerns. I seek some guidance, Mrs Osborne, because there are amendments to a number of other clauses that relate to contract issues, although they appear to have been listed with the wrong clause. I seek your direction about how to clarify that now, before we move on to the clauses that we want to debate. I am talking in particular about clause 9, which has amendment 4 associated with it, although it is an amendment to clause 10.

Sandra Osborne: They have simply been grouped together. That is the selection, which is what we go by to discuss similar issues.

Stella Creasy: That is helpful. In that case, I see no reason to delay the Committee further.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2  - Key definitions

Stella Creasy: I beg to move amendment 1, in clause2, page2,line12,at end insert—
‘(b) those who represent businesses with fewer than ten employees and are purchasing goods or services for use within their commercial activities will be considered consumers.’.

Sandra Osborne: With this it will be convenient to discuss new clause 1—Consumer protection for small business operations—
‘The Government shall publish a report within three months of the enactment of this Act to set out how businesses with fewer than 250 employees can secure appropriate consumer protection in their purchase of goods and services for use within their business operations.’.

Stella Creasy: Although we said that we did not want to debate clause 1, the Minister said in her introduction that the Bill was about relationships between businesses and consumers, and discussed the concept of a consumer versus the concept of a trader. The Opposition agree that it is important to have clear definitions. However, we are concerned about the growing debate about where certain types of businesses fit into the discussion. We think that debate is important.
We have tabled a number of amendments to tease out what the Bill will mean for consumers who are also businesses. We are all cognisant of how important small businesses are to our society and our economy. We must ensure that when we introduce new legislation or tidy up legislation, as the Bill is intended to do, we do not inadvertently exclude a category of businesses. Amendment 1 pertains to micro-businesses—businesses of fewer than 10 people, often sole traders—and new clause 1 pertains to small businesses of fewer than 250 employees.
I am sure that Members on both sides of the Committee will have comments and concerns about this issue. Let me set out why we think it matters. Small businesses create more than half the new jobs in this country and are responsible for the vast majority of our GDP. For small businesses to succeed, it is crucial that they have protection in law so that they are not encumbered by problems to do with purchasing. We must therefore find the best way to provide that protection.
One of our concerns, and the reason why we have tabled the amendment and new clause, is that the presumption that all businesses are able to interact with other businesses in the same way does not bear scrutiny. We want sole traders and micro-businesses to be considered consumers for the purpose of the Bill. A sole trader may be a new landlord or a new business person setting up a home office and looking for goods for it, such as chairs or a kettle. Hon. Members will remember the comments from the British Retail Consortium on Tuesday about the person who buys a kettle to use at work. A person who works or trades from home will have a kettle—I am sure we will all want a cup of tea this morning. [Interruption.] The hon. Member for Spelthorne is offering one, in a consensual way, as always.
How would the Bill apply to that example? Would the person buying a kettle for their home office be classed as a consumer—a private individual—or as a business? As the Bill is drafted, they would have to buy it as a consumer. The question is whether there is a gap there. If the person has a problem with the kettle—if it is faulty, explodes or does not make the requisite number of cups of tea—do they have the right as a consumer to return it? If they do, and the trader knows they bought it for their home office, will that affect their rights? That is the issue that we are trying to tease out this morning.

Steven Baker: The hon. Lady is making a compelling case about the purchase of kettles. However, has she thought about how her amendment would relate to things such as interest rate swaps? We have had endless discussions about when a business is and is not a sophisticated purchaser. Will she need to amend her amendment to take into account the complexity of the products that are sold?

Stella Creasy: The amendment is about those kinds of issues. It would ensure that under the Bill, which covers issues of consumer protection, micro-businesses were treated in the same way as other businesses. A micro-business—a business of fewer than 10 people—should have the same capacity to debate and discuss contracts as a large business.

Steven Baker: The point is that there were businesses larger than a micro-business that did not understand what they were buying with interest rate swaps. If the product is more complex, it may not be enough to assume that 10 people is the right boundary.

Stella Creasy: The hon. Gentleman makes my point; that is why we tabled the new clause as well. I encourage him to look at both. Amendment 1 is about micro-businesses. There is a strong and compelling case for treating them as consumers for the purpose of the Bill, and amending it accordingly.

Andrew McDonald: Does my hon. Friend agree that micro-businesses are in the same space as individual consumers? It is one thing for them to go about their core business, but when they conduct other business activity in furtherance of their trade they do not have the expertise or resources to devote energy and time to exploring the quality of the goods they buy. Surely it would be a freedom for those businesses if they were to be relieved of that sort of burden and if they could rely on the same qualitative standards as other consumers and businesses.

Stella Creasy: My hon. Friend hits the nail on the head. Another example might be someone setting up a new business. On Tuesday night I met a fantastic young woman, Nadine, who is setting up an export business, exporting to Nigeria. At the moment she is the business; but she has some people helping her. It is a micro-business. If she were to purchase a mobile phone contract for the business, she could get a business contract with any mobile phone company; but as she represents perhaps just two or three people, would she get the same sort of deal, and be entitled to the same sort of protection, as a large business? Under the Bill a business contract would not afford her that protection.
When firms negotiate with other businesses, they are not necessarily aware of how big they are. There is a disconnect between understanding the needs of micro-businesses and understanding how to help them and relieve them of the burden. I appeal to the instincts of many coalition Members regarding the importance of reducing regulation. It is a question of clarifying the fact that those businesses are consumers.

Steven Baker: Would the hon. Lady be content for her amendment to catch a micro-business employing fewer than 10 people that happened to be a hedge fund with assets under management of, say, £2 billion?

Stella Creasy: It is an interesting question, but I am curious; perhaps the hon. Gentleman feels he is on the wrong side if he is concerned about how much money a micro-business makes, rather than whether the law stands up to scrutiny with respect to the size of a business, and whether it is fair and reasonable to expect a micro-business to deal with the complexities of consumer law and business-to-business exclusion contracts.
That is why we have tabled new clause 1, to deal with a second group of small businesses—larger ones that might well employ a lawyer. They might make large sums of money and be able to get legal advice from counsel on their consumer purchases. We want to test that. I appreciate that the Government are already in negotiations with organisations such as the Federation of Small Businesses. The new clause would simply set a time scale for the discussion.
As I have said, the Opposition are aware that there are few legislative opportunities to make progress on such issues, so it is right and proper to try to make the legislation the best it can be. We want clear guidelines and we want to support small businesses by establishing that we understand the case in relation to micro-businesses and recognise the need to resolve the issues affecting smaller businesses with fewer than 250 employees. We appreciate that things are not as simple as they are with micro-businesses.
I can provide some examples, which may allay some coalition Members’ concerns about the categories involved and show what already happens. In some contexts the law already treats small businesses as consumers. The legal and financial ombudsman services treat micro-businesses as consumers for the purpose of their complaints-handling process. They acknowledge that in individual cases, smaller businesses should effectively be treated as if they are in the same position as consumers.
The legal ombudsman service is free to all members of the public, very small businesses, charities, clubs and trusts; it recognises that very small businesses are not in the same position as larger or, indeed, major ones to obtain expertise in dealing with the relevant issues—whether they concern kettles, tables, chairs or interest rates.
The amendment and new clause are about securing answers to the questions I have outlined, so that we do not ask small businesses to go blindly or without clarity into consumer regulations, or expect a newly set up trader such as Nadine to struggle to exercise her rights if she buys a faulty mobile phone contract while she is negotiating with her contacts in Nigeria about setting up her business.

Andrew McDonald: On the issue of what are perhaps the unintended benefits for micro-businesses such as hedge fund managers, I never thought I would find myself saying this, but would it not be entirely logical to extend the benefits of good consumer law and protection even to hedge fund managers while they go about their business, as we would to a small greengrocer whose kettle in the back of the shop broke down? Would it not be entirely consistent to say that we want the same standards to apply to all micro-businesses, so they can all have the benefits?

Stella Creasy: I absolutely agree with my hon. Friend. One would not want the greengrocer whose kettle breaks down to go into Argos and the traders there to know that, although the greengrocer may be using that kettle in their back room, a loophole exists that allows them to refuse to fix the kettle because it was not actually a consumer purchase. That is a theoretical possibility under the Bill as drafted, without the clarification that some businesses should be treated as consumers in certain instances. We believe that a micro-business is such a case.
This issue is not only such businesses’ private purchases. We know that small businesses have genuine concerns about some of the tariffs they face on major products or services such as energy, life insurance and loans. Again, the idea that a micro-business can negotiate with a bank manager or an energy company in the same way that a major business can does not hold water. I am sure that when Members, of all parties, talk to small business owners in their constituencies—as I am certain they regularly do—they hear these concerns and expressions of frustration that it is not a fair fight, because such businesses are faced with huge amounts of regulation and an unequal ability to negotiate. It is all very well saying that there might be “business contracts”, but not all businesses are treated equally.
Amendment 1 would give that protection to micro-businesses, so that we put them on a level footing with consumers. They should then be able to enjoy all the consumer protections that the Bill will provide. New clause 1 also says to slightly larger small businesses, “We have an answer for you on this issue. We will make sure that we clarify this element of the law within 12 weeks of the legislation being passed.” That means that such clarification can be absolutely informed by the work the Federation of Small businesses is doing, and by some of the concerns the CBI and the British Retail Consortium raised with us on Tuesday.
These amendments are about giving people the confidence that we understand and share their concerns, which I know Members on both sides of the House have heard expressed by businesses in their constituencies. Members of the Committee, regardless of party, will have been lobbied by the FSB on these issues and will have heard the plaintiff cry of Mr Cherry, who said on Tuesday morning:
“Because we are basically no different.”––––[Official Report, Consumer Rights Public Bill Committee, 11 February 2014; c. 26, Q55.]
As I say, that is what these amendments are seeking to reflect.
I urge Members to look at current legislation on major products such as telephone contracts and energy bills. They will see that there are already classifications in law that we can learn from, and which these amendments relate to. Section 51 of the Communications Act 2003 specifies that a small business is classified as a domestic consumer as long as it does not employ more than 10 people or trade in the telecommunications sector, so we already make provision for small businesses in some parts of the law. Our amendment could be seen as simply clarifying the situation across all elements of the law, ensuring that there are no inconsistencies. [Interruption.] One of the Government Members shakes his head. I would love to hear the explanation as to why that should not happen, because I am sure that small businesses in his community, particularly micro-traders, would be concerned if he did not consider it important to have such consistency. Without such clarity in the Bill, there is a genuine risk that micro-businesses could have the status of consumer when dealing with their phone contracts, but not when buying kettles, tables or desks. There seems to be an inconsistency here. I am looking at the Member in question to see if he wants to tell me why he was shaking his head. Perhaps he wants to let the Minister know later; we will hear afterwards.
I would be interested to hear from the Minister on this matter, because I appreciate that there are issues relating to European legislation and the use of consistent terms. Such legislation applies more specifically to larger small businesses, as it were. We recognise that there are difficulties in applying the concepts of “trader” and “consumer” as established in such legislation. That is why it is right to separate out slightly larger small businesses from micro-businesses. However, we think it right to argue that small businesses that are micro-businesses—in other words, businesses with less than 10 employees—could be included in the Bill now. By the time the report proposed in new clause 1 is concluded—12 weeks after the Bill is passed—questions about how we integrate European legislation, and what constitutes a consumer and what constitutes a business, could be resolved to the satisfaction of small businesses.

Mark Durkan: My hon. Friend did not sit on the Financial Services Bill Committee, so she will not be aware of what the Minister on that Committee said about the provisions relating to the consumer panel and the Financial Conduct Authority, and about the clauses that referred to consumer interests being taken into account. He cautioned that it was important not to have a narrowly defined concept of consumers, and that in the modern market one had to recognise that consumers could include businesses. He was absolutely adamant that businesses, even within the financial services sector, could be included, and they needed to be capable of being regarded as consumers for the purposes of the legislation.

Stella Creasy: I thank my hon. Friend for that intervention. I hope the hon. Member for Wycombe, who was so concerned about those who work in the financial industry as small traders, heard his words. It is because of such concerns that we wanted to put a pro-business measure before the Committee for consideration and inclusion in the Bill. I hope that Government Members will support us, and recognise that we are trying to understand the difficulties with the definitions of “business” and “consumer” within current legislation. Also, micro-businesses are already recognised in some elements of the law as consumers. The amendment is about standardising the approach. On Tuesday we heard from a range of bodies a strong call for simplification—for laws that people can understand and are easy to apply. It surely simplifies things if we say that micro-businesses, for the purposes of their purchases and contracts, are consumers not only when it comes to telephone contracts or complaints against a solicitor or lawyer, but across the board.
We could simplify matters by saying that, if micro-businesses have fewer than 10 employees, we do not expect them to have independent expert legal advice or a purchasing controller with separate knowledge of how to deal with business-to-business contracts. Instead, we simply expect them to start their business, get moving, get on with exporting and be part of the growth that we want to see in our economy—which measures such as this would support, because we would be taking away one of the inconsistencies that might be causing businesses to lack confidence.

Andrew McDonald: Is it not curious that the unfair commercial practices directive has been taken on board by several of our European partners, yet when we make the case for furthering the single market, this country lags behind? Would this not be an ideal opportunity to join our European partners and bring micro-businesses into this sphere of operation?

Stella Creasy: I hesitate to agree because although my hon. Friend is correct, I am nervous that Government Members might be wary of taking lessons from European nations. However, I would encourage them to look at how member states have already put protections in place; there is already such provision within European legislation. That is why we think the new clause we have tabled is right. Lessons can be learned from other European nations about the interpretation and implementation in law of the terms “business” and “consumer”, but we recognise that we must do that in a way that works in Britain.
The concept of micro-business and the concepts implied in the amendment are robust enough to include in the Bill, and we are separating out the two debates. We hope to reassure Government Members that we can move forward and have the pro-business measure that we want to see. I look forward to the Minister’s comments. I genuinely do not believe that this matter is as simple as we would like to think.

Rebecca Harris: I am very sympathetic to the hon. Lady’s point about businesses, and to the view of the Confederation of Small Businesses. The Business, Innovation and Skills Committee looked closely at the issue and recognised that the definition of “consumer” in the Bill complies with the consumer rights directive and simplifies matters—which I fear we would not if we rushed ahead and introduced a definition of micro-businesses. The hedge fund management company with a turnover of millions of pounds could actually be empowered, as a consumer, against the sole trader working from their living room. There are anomalies that would take much longer to sort out than we can manage during our scrutiny of the Bill.

Stella Creasy: It is certainly an odd turn of events for me to be defending businesses that make substantial amounts of money. I would argue that they could employ lawyers in any case, even if we did say that micro-businesses could be classified as consumers. We must separate out that vast majority of people whom we are trying to help here.
The micro-businesses I meet in my community are not hedge fund managers; they are people such as Nadine who have that “get up and go” and want to start up their own business. Nadine currently works full time for Hackney council and has two young children, but she spotted a gap in the market. She is the kind of entrepreneur I am sure we would all want to encourage. She does not have access to expensive lawyers, and while I hope her business will be phenomenally successful, currently she does not have huge sums of money. To ask her somehow to obtain a separate body of knowledge to deal with the basic problems she might face in setting up her business, as well as showing the “get up and go” to travel to Nigeria to negotiate with people and set up contracts, is to put up a barrier to her achievement, rather than enabling it.
Although I am surprised at the concerns of Government Members—trying to give hedge fund managers a much harder deal when purchasing kettles, tables and chairs—I hope the hon. Member for Castle Point understands that our concern is with the vast majority of micro-traders. Just to reassure her, EU law already contains a definition of a micro-trader, so a distinction is made between micro -traders and small businesses. The amendment would standardise how we treat consumers in this legislation. As I pointed out, a definition of a micro-business is given in other elements of the law, such as the Communications Act 2003, which addresses how ombudsmen deal with such businesses. We are trying to tease out these differences.
The hon. Member for Castle Point is right to be concerned about anomalies relating to larger businesses, but those should not be dealt with in terms of turnover, because that creates an artificial distinction. One or two people who start up a business should not have to employ a lawyer because, for example, they received a bad service when they bought products to set up their office; they should have a simple right of return. The Bill contains strong powers, which I am sure we will all support, so surely we should not be saying to people such as Nadine, just at the point she has just got her business going, “No, you are also going to need to get a lawyer if you don’t get the right contract.” If, for some reason, her mobile phone company does not give her the right tariff, but the advertising is not clear, it can trigger a set of exclusion clauses, causing her a headache when she should be focusing on getting her exports going, getting her orders in and fixing the business.
I caution Government Members that they sound as if they are being less than helpful to those businesses that have raised these issues repeatedly. The FSB has looked into the matter, and it would separate out micro-businesses from larger small businesses. That use of nomenclature is why we have drafted the amendments in this way. We are trying to be reasonable in attempting to resolve these issues, and I hope Government Members will be sympathetic to that.

Mark Durkan: Beyond the issue of the people operating as a business or within a small business, in the clause as it stands, does the narrow definition of “consumer” not mean that, for instance, individual Members of the House who are claiming expenses through the Independent Parliamentary Standards Authority for their mobile phone, on the basis that it is used wholly or mainly in their capacity as an MP, will not be classed as consumers? If anyone is claiming expenses, or being paid for equipment that they provide for their work, they will not, under the clause, be classed as a consumer.

Stella Creasy: My hon. Friend raises an interesting point. I do not know how many of us have had problems with mobile phone signal in this building and might want to be able to challenge the quality of that service—[ Interruption.]. The hon. Member for Castle Point says, “It’s rubbish” and I completely agree. Under the legislation, would we have a right of repair of a faulty good if we are using our phones for a business purpose? We are all sole traders for the purpose of the taxman and in our constituencies—sometimes, we feel very much like sole traders when dealing with some of the issues we have to deal with.
Those are the type of anomalies we are trying to resolve. Through these amendments, the Opposition are genuinely trying to help. There is a strong case for measures for micro-businesses that would be supported in the community, and in current UK law, and which would address concerns about how EU legislation is implemented. That is why we tabled these amendments. The anomalies to which I referred would apply in many circumstances. Let us consider the example of private landlords who have tenants living in their home. If a tenant breaks a kettle bought by the landlord, does the landlord have the right to return it? Is it a “business” or a “consumer” relationship?
Those are the issues involved. I appreciate that they are theoretical, but they arise because of how the legislation is drafted, deliberately to exclude businesses of some types from consumer protection. I would listen to Members’ concerns if they had examples of where the law does provide protection. It is worth remembering that business-to-business contracts have exclusion clauses that can be quite severe. We are asking that sole trader, Nadine, to deal with those exclusion clauses. That is heavy legwork and a lot to deal with.
We should rather offer Nadine the simplicity of saying that for a business of a certain size, it is not fair and reasonable to be expected to negotiate in that way. We should give her the simple protection that if the phone is not working, it can be taken back. We should enact clear rights about whether it works and about repairs so that such traders can get on with their business. Once they become larger, they are different. For example, they could expect to be able to negotiate a stronger deal. That is why the distinctions are there. However, there is a very strong case for micro-businesses.
If Members have heard otherwise from the micro-businesses and sole traders in their communities about some of the problems they face, I will welcome hearing from them, because we genuinely want to get this right. I hope that, having had this debate, Members will accept our genuine intent to make the Bill the best it can be. We particularly want to deal with the concerns for businesses that we have heard in the debate. I hope that Government Members will reflect on the merits of supporting the amendment and new clause.
I also hope that the Minister will come up with a proposal elsewhere in the Bill, perhaps on Report, to deal with the issue of sole traders and micro-traders, and give us a timeline regarding the FSB report for the Department for Business, Innovation and Skills. I do not think anybody here would want to be seen as being against supporting small businesses. However, there is a risk that we could come across that way if we act as though these issues were not important to the Bill. It is important to try to resolve that problem, and that is what Committee stage is often about. I hope the amendment and new clause will be received in that spirit.

Jennifer Willott: The Government have previously considered the case for small businesses to be treated as consumers, as I mentioned in my evidence. The previous Government and this one consulted on the matter in 2008 and 2012. In 2008, in the consumer law review, the Government asked whether the definition of “consumer” should be extended to include small and micro-businesses, whose bargaining power in a contract is often similar to that of a consumer, as the hon. Lady said. Business groups were opposed to that idea in 2008. In 2012, we proposed the definition that is now in the Bill and received broad support for it.
The Business, Innovation and Skills Committee acknowledged that all business groups that responded to the 2008 consumer law review preferred to retain the clarity of the current distinction between a business and a consumer. For example, the CBI said that altering the definition of a consumer would not be in the interests of smaller businesses. That position was supported by the majority of responses to the 2012 consultation, and the British Retail Consortium gave evidence on Tuesday supporting the single definition, to avoid creating discrepancies with the definition of a consumer in EU law.
People clearly feel strongly about the issue, and it is open for debate. That is why this Government and the previous one have consulted on it a number of times. Businesses have told us that it would be unreasonable for them to have the same rights and remedies as consumers, as their use of goods is potentially significantly far greater. We also heard that in evidence earlier in the week. For example, we heard that a kettle in the office of a micro-business would get far heavier use than one in a domestic setting, so to treat it in exactly the same way would not be reasonable.
Small and medium-sized enterprises, like other businesses, are not unprotected when they purchase things. In business-to-business contracts there are requirements that have to be complied with. Goods must be of a satisfactory quality and fit for purpose. They must match a description or a sample, and the seller must have the right to supply those goods. Those requirements are implied in the contract, and a buyer may claim damages or treat the contract as being at an end if they are breached.
The example was given earlier of a greengrocer buying a kettle. If it did not work, presumably it would not be fit for purpose and of satisfactory quality, so the greengrocer would have rights under the existing legislation. All businesses, including micro-businesses, are protected when dealing with other businesses under the Sale of Goods Act, so they have the right to reject. They are also protected by misleading marketing protection and unfair terms legislation.

Andrew McDonald: The Minister highlights an instance where somebody is protected with reference to the existing legislation. There is, perhaps, a missed opportunity to unify the existing legislation. Is it not expecting too much of a sole trader or a micro-business to avail themselves of all that knowledge? Would it not be easier if the entire thing were just simplified and unified into one set of rights that were applicable to consumers and micro-businesses? It puts a burden on those businesses to tool up and be ready to deal with a bigger operation to enforce their rights.

Jennifer Willott: We also need to remember, though, that as part of setting up a business someone obviously has to understand what their role and responsibilities are. Part of that is knowing the legal framework within which it operates. That includes knowing the responsibilities on the business to comply with the law in different areas, and knowing that things apply differently to a business. The tax regime is different for businesses from consumers, and no one suggests that that should be otherwise. Businesses have told us that is important that there is clarity in that relationship. We also have to remember that smaller businesses often supply other small businesses with goods and services, so protecting one group might not necessarily be of unequivocal benefit to all small businesses. That is one matter that some business groups are concerned about.
Including micro-businesses in the definition of a consumer would risk undermining the clarity that we seek to achieve in this Bill, which would be bad for consumers and traders. We heard repeatedly in the evidence the other day that the clarity that the Bill will introduce is one of the most important parts of it and will hopefully make the system much smoother and simpler to understand. If we included micro-businesses in the definition, it would undermine that clarity and could potentially make it more difficult for people to understand what their rights and remedies were.
There may also be unintended consequences of including micro-businesses in the definition. For example, larger businesses might stop doing business with smaller ones if they had to offer them more rights and remedies than they did to a slightly larger business. One might end up with what I think has been described as a glass ceiling for small businesses when they grow. They could end up with a step change in their rights and remedies if they took on one more employee, for instance. That might put some micro-businesses at a disadvantage compared with a slightly larger business.

Andrew McDonald: Is it not a curious concept to talk about a step change? We heard from the FSB that its focus was on getting repeat business and that it wanted to make its customers content and happy. Why on earth open up gaps that mean that people do not receive the same quality of service or product, or do not have the same rights and remedies? I do not quite follow the logic of saying that it is a deterrent to business if somebody has the same rights as a consumer. It does not seem to follow.

Jennifer Willott: What I am suggesting is that the relationship a larger business would have with a company that had 10 employees would then have to be different from the relationship it had with a business that had 12 employees. To all intents and purposes, the negotiating position of those two smaller businesses would not be massively different, but it may make it beneficial for a larger business to ensure that it just did business with other larger businesses, because it would get out of having to comply with certain regulations.

Stella Creasy: The other side of that argument is also true, is it not? Without the protection that the amendment could offer micro-businesses, much larger businesses are much more likely to exploit them, because they do not have the capacity to negotiate equally on a business-to-business contract.

Jennifer Willott: I do not agree with the hon. Lady, because, as I have just said, protection is already built in for business-to-business contracts. That applies to businesses regardless of their size. The Government are also doing a lot to support small businesses, to enable them to operate more effectively and to grow.

Stella Creasy: We disagree about that, because some protections that the Bill will offer will be simpler and clearer for micro-businesses, and that is what we are trying to achieve here. Even if they were able to negotiate on a business-to-business contract, for their rights to be relevant they would need to be able to operate them. The Minister is asking small businesses and micro-traders to have the legal expertise and time to be able to dispute a contract with a large business, in the same way as with another business-to-business contract. That is simply not going to be the case, is it? There will be inequality and an inability to operate those rights.

Jennifer Willott: In any relationship between a significantly larger entity and a smaller entity, clearly there will be a power imbalance of some sort. That does not mean that a significant lack of clarity has to be created in the law to try to counteract that. There are other ways to ensure that smaller businesses are in a position to know what their rights are and enforce them. Part of that is the support that the Government are giving to small businesses by cutting a lot of regulation, to make things a lot simpler for them to operate, which is also saving a significant amount of money. For example, the reduction in business rates is helping small businesses to grow.
It is clear that there are already rights that apply to micro-businesses, as I have said, so they are not completely unprotected in their relationships with larger businesses. Members have mentioned regimes in which micro-businesses have extra protection. The Government have recognised that there are areas in which it is harder for micro-businesses to operate and negotiate, so we have ensured that there are specific sectoral regimes that count micro-businesses as consumers where there is a particular issue. We want to ensure that we do not cut across those regimes in the Bill, and that the systems that are in operation work. Martin Lewis mentioned the other day how effective the Financial Ombudsman Service is. The hon. Member for Walthamstow mentioned that micro-businesses can be considered as consumers in those terms.
Systems are in place that recognise the different position of micro-businesses and ensure that they get the support that they need to operate effectively, but it is not appropriate to amend the Bill as the hon. Lady suggests, because business groups in particular have told us in two consultations that they do not want that to happen.

Stella Creasy: Of course, the Minister is being selective in saying that business groups have told her that they do not want that to happen. In fact, the FSB, in its evidence on Tuesday, was clear that it did want it to happen. Not all business groups are of the same mind as the Minister.
More importantly, I want to test the Minister on her argument that we must provide clarity about the law and that it is much clearer if we just treat individuals as consumers in their private relationships with businesses and do not have a distinction for micro-traders. However, she also argues that there are particular sectors where we do treat micro-businesses as consumers for the purposes of contracts. Does she not see the inconsistency there? She cannot argue for clarity and simplicity in the law in some areas but not others. Either we say that, for the purposes of the relationships and contracts that people enter into as part of their business, we regard micro-businesses as needing the same protections as consumers, or we do not. Surely that is the simplest place to be, and that is what the amendment would achieve.

Jennifer Willott: Unless the hon. Lady suggests that all sector-specific regulation should be wiped out, so that we just have one Bill that applies to everything—no one is suggesting that—we will, by definition, have a system in which there is extra regulation that takes into account specific sectors. We have already discussed that on Second Reading and in the evidence session.
All hon. Members recognise that there are areas where extra regulation applies, because certain sectors need it. The same applies to certain areas where we feel micro-businesses need additional protections, and so they are treated as consumers, but that does not apply across the board.

Mark Durkan: The Minister is saying there is no point providing for businesses as consumers in the Bill, because they are provided for discretely in sectoral legislation and provisions that we should not cut across. Surely the same applies to individual consumers, who are provided for in all those other bits of legislation. If we are providing in the Bill for consumer protection for individuals, who are also provided for in other legislation, why cannot we equally provide for businesses to be protected here as consumers, just as they are provided for under other arrangements?

Jennifer Willott: The hon. Gentleman is correct that different sectoral regulations apply for consumers and businesses. The Bill, to use the jargon, is a horizontal Bill. It applies with a basic level of consumer rights across the board. On top of that, particular areas for which we all agree further regulation is needed have sectoral regulations. The whole point of the Bill is to ensure that there is clarity about exactly what rights a consumer has at any one time. The Bill is designed to relate to consumer-to-business relationships. Other legislation relates to business-to-business relationships and to consumer-to-consumer relationships, but those are not covered by the Bill.
It is important to maintain clarity on the point that the Bill relates to the consumer-to-business relationship, to ensure that it works and is successful in the long term. The regulations implementing the consumer rights directive, the Consumer Protection from Unfair Trading Regulations 2008 and so on all consistently define “consumer” in the same way as it is defined in the Bill. If we changed the definition in the Bill, different pieces of legislation would define “consumer” differently, and that would introduce significant complexity to the system. It would make it much more difficult for people to identify their rights. The Government are committed to helping businesses, especially SMEs, recognise that they are a fundamentally important part of our economy.

Stella Creasy: The Minister is trying to suggest that if we were to include micro-businesses in the definition of a consumer for the purpose of the Bill—in other, to define it in a different way from other legislation—it would not accord with EU legislation. Will she say a little about the EU directive on small businesses, which sets out the concept of a micro-business? That concept exists in EU legislation, and with the amendment, the Bill would remain in accordance with that.

Jennifer Willott: I did not say that. I said that under British law, the regulations that implement the consumer rights directive and the Consumer Protection from Unfair Trading Regulations have a consistent definition of a consumer. That is the same definition as we are using in the Bill, to ensure that we have consistency. To introduce a different definition in the Bill would mean that different groups would have different rights under different regulations, and that would make things much more complicated.

Stella Creasy: I want to press the Minister on this point. The amendment would not change the definition of a consumer, it would apply that definition to micro-businesses. It argues that there are instances in which small businesses—micro-traders—should be seen as consumers. It would not change what a consumer is for the purposes of the Bill, would it?

Jennifer Willott: Well, yes, it would. It would change the group of people who are counted as a consumer and to whom the regulations apply by adding extra groups. So, yes, it would change the definition of a consumer.
New clause 1 would require the Government to produce a report three months after the Bill is enacted on how businesses with fewer than 250 employees can secure appropriate consumer protections when buying goods or services for business use. I am not quite sure what the new clause would achieve. As the Committee will be aware—it was mentioned today and in our evidence sessions on Tuesday—the FSB is currently conducting research on smaller businesses as consumers. We have already undertaken to examine those findings when they are published and to respond to any of the recommendations that are made in it. We think it is an important area to look into. We have committed to work with the FSB to look at the recommendations and to respond to them, and I am not sure that the new clause would add anything to that commitment. I therefore ask hon. Members not to press the amendment and new clause.

Stella Creasy: I thank the Minister for her reply, but I must say that it raises more questions than it answers. First and foremost, I want to put it clearly on record that there is support from the business community, particularly the small business community, for resolving the issue. The suggestion that businesses are overwhelmingly against our suggestion simply is not right. In fact, it would deal with some of the challenges that we are trying to address about the distinctions between various types of businesses. We want them to have a level playing field when it comes to contracts.
The Minister made a number of points to which I will respond. First, she talked about the kettle test. I think that all of us would be concerned if kettles were sold with a test for how many times they could be used, because we would recognise that the idea that businesses— particularly small businesses and micro-businesses—would face a different test for how many cups of tea they could make in a day, rather than being able to make a reasonable number of cups of tea— [Interruption.] The Minister shakes her head, but she used the argument made by the BRC about selling a kettle to justify not considering how we can protect small and micro-businesses from the problems that they might face with basic goods that they buy for use in their business.
I urge the Minister not to confuse cause with consequence. The kettle test is about what fair and reasonable use of a product is. We are trying to ensure that it covers small and micro-traders. We think that that is a fair test. Obviously, if someone is making 500 cups of tea a day, whether they are an individual consumer at home—I am sure that I know some people in this House who appear to drink 500 cups of tea a day —or a business, there should be a fair and reasonable test about their use of that product. That is what the amendment would introduce.
In the Minister’s response, she showed the confusion that already exists among micro-businesses about what their rights are when it comes to some contracts. She talked about sector-specific areas where there is a need to protect them, but did not recognise that they might also need protection as consumers of basic goods, which is what the amendment would introduce. That blows apart the argument that the Bill will somehow simplify the situation. We are trying to simplify it by saying, as we all recognise, that micro-businesses—those with fewer than 10 employees—do not have the capacity to have such negotiations and go line by line through the exclusion clauses that might exist in business contracts. If we recognise that when it comes to telecoms or energy contracts, why do we not recognise it when it comes to basic goods and services if a business bulk-purchases a number of chairs for its office, for example? That is the sort of protection that we are trying to offer people.
The point that I was trying to make—I apologise to the Minister if it was not clear—is that she was arguing that we should not adopt the amendment because it would change the definition of “consumer”. The point, for me, is where the definition of “consumer” is applied at the point of a contract. We are trying to give that protection to micro-businesses rather than change the definition of a consumer, because we recognise, as she does, that there are power imbalances in negotiation. Small businesses cannot negotiate in the same way that larger ones do when they have problems and are seeking redress.
There are two points here: one is about a business contract being offered on competitive terms, and the other is about what happens if something goes wrong. The Bill will give clear and good protections about rights of redress and what can be done to repair things. It is about a greengrocer being able to return the faulty kettle without having to argue about whether it is a faulty repair under small business legislation on business contracts. It is about just being able to say, “It doesn’t switch on, and I want to return it,” without having to quibble about it or take up the day doing it rather than counting cabbages, which I am sure we all want greengrocers to be able to do. The amendment is a simplification and a deregulation for small and micro-businesses.
I am delighted to hear that the Minister supports action on business rates. I am sure that it is another coalition split and that she will be joining the Opposition in supporting business rate cuts, but we believe that it is not just about the money that people are paying. I say that as a London MP who recognises that in some areas of my constituency, business rates are higher than the rents that business owners are paying for their properties. That is not the only problem that our small businesses have. The myriad confusions about their rights and where they can be operated are one of the things that drain the confidence of micro-traders. That is what the amendment is about.
The Minister talks about sectoral protection. I urge her to think about 10 or 15 years ago when things such as Google and social media did not even exist, and nor did the kinds of contract that people might enter into, business to business. Buying a dongle did not even occur to small businesses, because those products were not around then. We only make consumer rights legislation once every 10 to 20 years; to get it right, we should future-proof it. If we recognise that a group of consumers —micro-businesses—has particular problems, so that in some sectors we afford them particular protection, which the Minister accepts already happens, why do we not future-proof their business? Why not simply say, “If in the future a new form of technology is developed that might create a service or a good, we will give you protection and not wait until consumer detriment is at such a level that we have to introduce a sector-specific response”? We are doing that for consumers through this legislation; why should small businesses, and particularly micro-businesses, not be afforded the same protection?
I am just a bit disappointed by the Minister’s response, because it does not go to the heart of what many small businesses will feel when they listen to this debate. They want somebody to be on their side. If the Minister was saying, “We are absolutely sympathetic towards micro-businesses. We want to try to find another way of doing this,” that would be one thing, but she is ruling out doing something to help micro-businesses through this Bill and has not come up with an alternative.

Jennifer Willott: As I said, the FSB is examining the matter, which is not as clear-cut as the hon. Lady suggests. It is much more complicated. The Government have committed to considering the FSB’s conclusions and responding to any recommendations. It may well be that the FSB produces some superb recommendations that the Government are able to implement in full. It may well come up with a range of things, some of which need legislation, some of which need regulations and some of which is just about best practice or Government advice and support. We do not yet know what the FSB will propose, so it is putting the cart before the horse to make proposals now. The FSB will be producing a report, to which the Government have committed to respond.

Stella Creasy: Again, the Minister is arguing on the one hand that we do not need legislation to help micro-businesses and on the other hand that we might. This Bill, which may well affect the issues that she is talking about, is before us now. We think there is a compelling case when it comes to micro-businesses.

Andrew McDonald: We heard earlier from the Minister that when somebody starts a new business, they have to prepare for that environment and understand the legal framework within which they will be working. If the people behind new start-ups could enter a sector knowing that they had the same consumer rights as they did when they went in a grocers or a clothes shop the previous day, and were unfettered from considerations regarding legal advice about the lie of the land, would that not be a stimulus to small business start-ups?

Stella Creasy: I completely agree. If those people are listening to the response of the Minister, who now suggests that legislation might be possible in the future but we do not know, they will be even more confused about the legal framework that they need to understand when setting up a business. They will be looking to us as parliamentarians to push, as we are trying to today, for clarity.
I repeat: this Bill is before us now. The Minister talks about how the Government are discussing the matter with the FSB, which we welcome and encourage—indeed new clause 1 is about setting a timetable for that process. Governments of all colours often talk about negotiating and discussing matters with various interest bodies and stakeholders, but do not necessarily commit either to publishing the research or to acting on it. That is not a partisan point; it is true of all Governments. Establishing a timetable would give businesses some clarity. There is debate to be had about how the proposal would be implemented for businesses with more than 10 employees, but there is a clear-cut case for applying it to businesses with a staff that numbers fewer than 10.
I caution the Minister that it is no good to say, “We are talking to people about it,” when the legislation is here. The cart is there with the horse. We need a commitment from the Government today that they will legislate for the proposal.

Jennifer Willott: I am saying that these rights already exist for micro-businesses. I would be concerned if anyone listening to the debate today thinks that micro-businesses do not have any rights if they buy a kettle that does not work. They have rights under the Sale of Goods Acts and other legislation. A greengrocer whose kettle does not work is entitled to return it and get their money back. It is simply not the case that micro-businesses do not have any rights under existing legislation.

Stella Creasy: That makes the Minister’s case even more difficult to understand, because that means either that there is no point to the conversations with the FSB because small and micro-businesses are already covered or that there is an issue to address, but that this is not the legislation in which to do so. Small businesses listening today will be holding their hands up and saying, “I just want someone to tell me what I can get on with and what I might need legal advice on.” We are trying to give them that clarity with the amendment.
The Minister cannot have it both ways. If there is an issue that needs to be addressed, we have legislation on consumer rights in front of us now in the House so this is the time to do it. She said a few minutes ago that legislative measures might be required. [Interruption.] The Minister says she did not say that, but I think that the record will show clearly that she said that legislation might well be required.

Jennifer Willott: I did not say that. I said that we do not know what the FSB is going to recommend. There is a whole range of things that it is looking at and might recommend. We do not know what its recommendations are going to be.

Stella Creasy: Ah, so is the Minister now saying that, through the way that the Government have approached the Bill, they are ruling out any legislation on the issue and are saying that they would not bring in legislation, so that even if the FSB suggests that legislation is required the Government will not listen? I am not clear about that myself and businesses listening today will be even less clear about it.

Jennifer Willott: I am saying that the Bill covers relationships between consumers and businesses; other legislation covers relationships between businesses. The FSB has said it is concerned that some issues have still to be considered, and it is looking at them at the moment. The Government have committed to responding to any recommendations the FSB makes later this year. That is the lie of the land now for small businesses and consumers. This Bill refers to consumer-business relationships.

Stella Creasy: If the FSB comes back, then, and says that for the purposes of consumer law we should regard micro-businesses as consumers, the most that can happen is that the Government will say that they agree but the legislative opportunity to resolve the matter has passed, and so we will have to wait another 10 to 15 years for more consumer legislation—either that, or the Government will disagree with the FSB. That does not feel clear or simple to us—it does not seem to be in the spirit of clarifying consumer law.
The case the Government have made for ignoring the issue at this point is not strong. Labour Members will support small businesses by saying that this issue needs to be resolved. We feel that the amendment offers a solution that would work. We know that it has support from the FSB. I am sure that Government Members will be disappointed that they have to explain to FSB members in their local communities why it is that when the Government had the opportunity to make progress, they avoided doing so.
If the Minister is more committed about the Government response to the FSB’s research and sets out a timetable for that response, I will be happy not to press new clause 1. We are concerned because all Governments commission research but then wait months or years before they come back on what the research might mean. The aim of the new clause is to set a timetable for implementation, so if she responds on that matter I will be happy not to press the new clause to a vote.

Jennifer Willott: We do not actually know when the FSB will publish its report, so I cannot give a timetable, but the Government are interested in what the FSB is working on and have made a commitment to respond to it.

Stella Creasy: Let me help the Minister out: if she will say that, within three months of the FSB publishing its report the Government will make a commitment to responding to it, we will not press new clause 1 to a vote. Twelve weeks seems a reasonable timetable for responding to a piece of research. Will she give that commitment?

Jennifer Willott: As I have said, we do not know when the FSB will produce its research. I am not going to commit to a particular deadline, but the Government have committed to responding to the FSB’s report. I cannot commit to a timetable because we do not know when that report will be produced.

Stella Creasy: I am disappointed to hear that. I have dealt with Government timetables previously, in connection with other pieces of legislation, when they have talked about summer and autumn timetables. We all know that the reality is that issues can get kicked into the long grass. The measure that really matters for us and that we feel strongly about is amendment 1, which I will press to a Division. I am happy not to press new clause 1, as I understand that the FSB report has not turned up; I just wish that the Government were more committed to giving a timetable when that research is provided for making progress on the issue for larger businesses. We will press amendment 1, however, because the Opposition feel that it is important to speak up for micro-businesses.

Mark Durkan: On a point of order, Mrs Osborne. I want to seek your guidance. The amendment relates particularly to the limitations of subsection (3). There are other issues beyond those related to micro-business on which I wish to test the Minister—for instance, how the restriction might apply to employees who themselves provide some equipment that is necessary for their employment, and the example I gave about MPs. Do I raise those matters in the clause stand part debate or should we discuss them now, since they relate to that particular limitation, although not directly to the amendment?

Sandra Osborne: Order. We will deal with the amendment and consider other issues on clause stand part.

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 9.

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: Clause 2 sets out the key definitions that apply in part 1, specifically those of trader, business, consumer, goods and digital content. We have decided to include traders of all sizes within the definition of trader to promote confidence among consumers dealing with small and micro-businesses, and clarity for consumers and traders alike. That objective would be greatly undermined if consumers faced different rules depending on the size of business with which they were dealing. Any variation in basic consumer law applied to different sizes of business would probably be counterproductive, particularly for micro-businesses. Consumers could choose to avoid buying from firms that they perceived as having fewer obligations to treat them fairly if something went wrong. Under EU law, certain rights and remedies must extend to all businesses within their scope, regardless of size. That is the case, for example, under the unfair terms in consumer contracts directive and the sale of consumer goods and associated guarantees directive, both of which form the basis for the relevant chapters of the Bill.
We believe that the Bill will benefit all traders. The simplified and consolidated provisions on unfair contract terms will make it clearer for traders which terms are assessable for fairness and how they can benefit from the exemption from the fairness test. The Government consulted in 2008 and 2012 on whether to include businesses in the definition of “consumer”, and on both occasions the majority of responses supported our position.
We think it is helpful to clarify that included within the definition of “business” are the activities of any Government Department or local or public authority. That is the current position under the Sale of Goods Act 1979. The definition of trader in the Bill is wide enough to include Government Departments, local and public authorities anyway if they enter into contracts with consumers, but we want to put that beyond doubt. 
“Goods” means any tangible, moveable items; water, gas and electricity are included only if they are supplied in a limited volume or a set amount. That definition is consistent with those in the regulations that implement the consumer rights directive. We also want to be clear that a set amount of such commodities more obviously constitutes goods than larger or unlimited amounts supplied as part of an ongoing service of providing utilities.
“Digital content” means data produced and supplied in digital form. That is important, because different rights attach to digital content compared with, for example, digital devices, which are goods and may include some digital content. Overall, the definitions are consistent with those used in the regulations that implement the consumer rights directive, so the legislation creates a coherent framework of consumer protection.

Stella Creasy: The Minister will be well aware of our concerns about the Bill, and I do not intend to repeat them in the context of clause 2. The Minister kindly offered to write to us on Tuesday about how public services will be affected. As she has clearly set out, “business” in the context of the Bill includes the work of any Government Department, local or public authority. We look forward to a later debate in this Committee, which I am sure many Government Members will enjoy, about having provisions in the Bill that apply to relationships in the public sector. It is important that we clarify them. I would welcome details about when the letter the Minister offered us on Tuesday will arrive, so we can understand her position on this matter.

Mark Durkan: Looking at this clause in the context of the stand part debate, I will be grateful if the Minister can help me particularly with subsections (3) and (4) on the definition of who qualifies as a consumer. We have already heard the issues dealt with in terms of those who are obviously trading as businesses, be they micro-businesses or of other scale. There is also the question of the individual. Subsection (3) states that:
“Consumer” means an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession”.
Some individuals, for the purposes of their employment, have to provide equipment of their own. It might be that a nurse has to provide a nurse’s watch, a specialist bit of equipment or whatever, but because it has been used wholly or mainly in the context of that profession, does that mean the nurse then does not have the rights of a consumer in relation to any concern that arises?
We know that zero-hours contracts are not only an issue in their own right, but sometimes people have to buy their own uniform. In that instance, because they buy a uniform for the purposes of their trade or craft whenever they get the hours, does that mean that if anything is wrong they do not count as consumers in that regard? Under subsection (4), a trader could say to them that they are obviously using it in their craft or profession and therefore they do not have consumer rights.
I know MPs should not legislate for themselves alone, but it would be odd if it did not occur to us in the context of this legislation where we might stand when it comes to particular goods that we use mainly or wholly in the context of our work as MPs. It might be mobile phones, as was suggested, or other equipment, some of which people may claim on expenses from IPSA on the basis that they are used wholly or mainly in the context of work. If something is wrong with that equipment and we go back to our provider or supplier, do we not have the status of consumers under the Bill?
Under subsection (4) a trader would be able to say: “Surely you are using that in the conduct of your work as an MP? I have read reports that you get expenses and therefore you are not a consumer because you are using it wholly or mainly in the context of your profession.” Where do individuals who are not set up and registered as a business in their own right stand? Where do we stand as consumers in that regard? Does subsection (4) essentially allow a trader or other provider who knows the circumstances and is able to surmise that the equipment is used in the course of employment for which people are either receiving expenses or are not not, as in the case of nurses and others, to say it is used wholly or mainly in the context of their work? Are they then disqualified as consumers? If so, is that wise or proportionate?
What about people who are not consumers under this legislation or covered by all the other bits of sector-specific legislation and provisions that the Minister talked about in reply to the earlier amendment? These individual consumers see themselves as individual consumers and are now in limbo. They will have purchased this equipment. Nobody else will have bought it for them. If they are in a position to claim it on expenses or by whatever means, they will do that, but often they cannot. As long as the trader can show that they are using that equipment, or item or service, “wholly or mainly” in the context of their trade, craft or profession, they are discounted as consumers. Will the Minister explain that and assure me about provisions regarding the variety of individuals?
Many hon. Members could come up with other options and suggestions. I could, too, but I would not want to go through a whole ecosystem of people who could be caught in limbo, whereby the buyer thinks it is an individual purchase, but find that, because of the narrow definitions in the clause, they have no standing as consumers.

Jennifer Willott: On the first point, made by the hon. Member for Walthamstow, I sent Committee members a letter this morning, so they will have that on returning to their offices.
On the points raised by the hon. Member for Foyle, “wholly and mainly” is used the other way round, so if people use something wholly or mainly as a consumer, they do not lose those protections if they also occasionally use the things for business. For example, if they buy a kettle for their house and occasionally work from home, even if they use it while they are working, because it is wholly or mainly used for their personal use, consumer rights relating to that kettle are not undermined.
The definition is consistent with the definitions used in regulations that implement the consumer rights directive. Stakeholders said that it is important that the definition remains the same, which is why we are using the wording here. Essentially, as I said, we want to ensure that consumers do not lose their consumer rights if they use a product for work purposes occasionally. The provision is designed to protect people, rather than the other way round. I am sure that hon. Members agree that we do not want consumers to lose their consumer rights if something is used occasionally for other purposes.
On the instance that the hon. Gentleman raised about using a mobile phone—for example, if an MP purchased a mobile phone—if that is used wholly or mainly as a personal phone, they would be covered by the protections in the Bill. If they purchased it to be used as a work phone, that would be a business issue. I should like to clarify that it is not that business-to-business relationships are governed only by sectoral regulation; basic rights that are effectively consumer rights apply to business relationships. Businesses are protected under the Sale of Goods Act 1979. If something does not work—if it is not satisfactory quality or if it not fit for purpose, and so on—those broad rights apply to people purchasing or buying goods in a business-to-business contract as well, under the 1979 Act. Businesses are also protected from misleading marketing, and so on, and protected under the Unfair Contract Terms Act 1977.
Plenty of legislation would apply if an MP purchased a phone for use in his or her work. That general protection already exists in law. However, the definition in the clause is designed to ensure that people do not lose their consumer rights if they use something occasionally for work purposes.

Stella Creasy: Often, people are required to buy a uniform for their work. Given that they might have to wear that daily, would it be covered by consumer or business legislation? It is not clear to us from what the Minister said whether the “wholly or mainly” purpose only applies to occasional wearing of a uniform, which for many people probably would be an employment offence.

Jennifer Willott: I will come back to the hon. Lady later with some clarification.
The clause relates to people’s purchasing something for use as a consumer. If they purchase something for use in work, it would normally be a business-to-business relationship and they would be protected under the Sale of Goods Act and the Unfair Contract Terms Act, and so on, which would apply.

Mark Durkan: We are talking about individuals. A nurse who buys a watch—there is a particular shape, style and type for their profession—buys it as an individual. That nurse is not a business, but clearly the watch is wholly or mainly to be used for a professional purpose. They will not be defined as a consumer under the Bill, but surely they are not a business either.

Jennifer Willott: If a nurse buys a watch that they wear on their wrist and use all the time, they are purchasing it as a consumer. If they buy a watch that hangs down from the pocket for a specific use they are not an individual consumer buying something for their personal use, because they are purchasing it for their work.

Mark Durkan: Are they a business?

Jennifer Willott: They are purchasing it for their work. Those definitions already exist in law; the Government are not changing that framework. A nurse who buys a watch is protected by the Sale of Goods Act 1979 and the Unfair Contract Terms Act 1977. The clause pertains to individual consumers purchasing things for their personal consumption.

Mark Durkan: So it is clear that although the Consumer Rights Bill is supposed to codify, clarify and strengthen things, if people who think of themselves as consumers try to exercise their rights, they will be told, “No, it doesn’t apply to you.” It is like the old story of the two-hour dry cleaners. A customer is told to come back next Tuesday, and when they say, “But it says ‘two-hour dry cleaners’ outside,” they are told, “No, that’s just the name of the shop.” The Consumer Rights Bill is just the name of the Bill.

Jennifer Willott: A broad range of legislation offers protection for consumers, whether they are consuming something in a personal capacity or as a business. The Sale of Goods Act and the Unfair Contract Terms Act apply to any purchase that an individual makes. There is already a significant amount of protection available. Under the definition in the clause, a consumer is somebody who purchases something wholly or mainly for their personal use. We want to ensure that people do not lose the protections they already have. We are broadening the definition by including the phrase “wholly or mainly”, so people do not lose their protections if they use something occasionally for work-related purposes. We are not changing the current set-up of protections under the legislation that I have mentioned.

Mark Durkan: Let me use the example of MPs who have mobile phones—some may have more than one. I have one contract for which I have never claimed from IPSA or anybody else, and another for which I claim part, which would count as “mainly” used for work purposes. Therefore, I will have consumer rights under the Bill for one contract but not for the other. Is that right? If I raise an issue with the trader, are they in a position to ask, “Did you claim for this on expenses?” Similarly, somebody in another profession may be asked, “Did you claim this on your tax returns?” to identify whether they are using it “wholly or mainly” outside their trade or profession. Surely the clause will create a serious twilight zone.

Sandra Osborne: Order. I would appreciate it if Members ensured that interventions are slightly shorter.

Jennifer Willott: I want to clarify that we are not changing the current set-up. Currently, individuals have different protections, whether they are purchasing something for their personal use or for work purposes. That is the current situation, and the Bill will not change that. Nobody has suggested that that should be changed. If an item is used for work business purposes, it tends to have different usage. A mobile phone for work will often receive more use, and use more data. The use changes, so the rights, and the legislation framing them, will differ. I have not seen evidence of a dramatic problem that people have sought to change. There is legal protection that people can call on.

Stella Creasy: We may want to return to the matter on Report, because there is growing concern about zero-hours contracts. Whatever we think of those, there are requirements for uniforms and specialist equipment that people may be expected to purchase and maintain as part of the job; but is that being done in a business context? What would happen if the stitching on a uniform was faulty? Would someone have rights as a consumer to return it, given that they would be wearing it regularly for work and had to buy it as part of their contract? Clarity is lacking, and I urge the Minister to discuss the issue with her colleagues.

Jennifer Willott: There is no confusion about that. If someone purchases a uniform with faulty stitching and it is not appropriate for use, they have rights under the Sale of Goods Act and are completely covered. If something is not fit for its purpose and as described, the purchaser can return it and get their money back. There is not as much confusion as people sometimes make out.
The clause is about definitions, including those of a consumer and a trader. We are trying to ensure that people do not lose their protection as a consumer when they purchase something that they then occasionally use for work. We are making the definition in the Bill consistent with the one in the regulations implementing the consumer rights directive, to ensure that there is simplicity across the board. With a consistent approach to definitions, people can be clear about their rights.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mr Gyimah.)

Adjourned till this day at Two o’clock.